Lib­erty House’s San­jeev Gupta may ‘Res­cue’ Tata Steel’s UK Biz

Gupta, who has res­cued sev­eral steel plants in the UK so far, is ea­ger to take on the chal­lenge of turn­ing around co that has been suf­fer­ing losses for al­most a decade, but this comes with a cost caveat

The Economic Times - - Companies - Megha.Man­davia@ times­group.com

Eco­nom­ics and man­age­ment, Cam­bridge Univer­sity

Founded trad­ing com­pany Lib­erty House in 1992

Com­ple­ment trad­ing busi­ness with ac­quired man­u­fac­tur­ing base Mum­bai: San­jeev Gupta, the 44-year founder of Lib­erty House, has emerged as a white knight that could save Tata Steel’s UK busi­ness from an im­mi­nent shut­down and job losses. Gupta, who has res­cued sev­eral steel plants and hun­dreds of jobs in the UK so far, is ea­ger to take on the chal­lenge of turn­ing around a com­pany that is run­ning into losses for al­most a decade. He has al­ready be­gun dis­cus­sions with the UK gov­ern­ment to save the coun­try’s largest steel­maker.

“This whole thing has come as a bit of a sur­prise to ev­ery­body. No­body was ex­pect­ing Tata to make a dra­matic move. We haven’t done a proper anal­y­sis, but we are scram­bling to do one as we speak,” Gupta told ET in exclusive in­ter­view. “We have started a di­a­logue with Tata, but they are try­ing to work out ex­actly what process to fol­low. All this will be­come clearer this week.”

Tata Steel de­cided to sell its poor­lyper­form­ing UK steel busi­ness last week, giv­ing up its nine-year fight to sal­vage the op­er­a­tions of the busi­ness it bought as part of the takeover of Corus at the peak of the com­mod­ity price boom in 2007.

Gupta’s in­ter­est in Tata Steel, how­ever, comes with a caveat. He is propos­ing a rad­i­cal turn­around plan that could cost as much as £1 bil­lion by shut­ting down the blast fur­naces and in­stead pro­duce steel from the scrap gen­er­ated in do­mes­tic mar­ket.

“I am talk­ing about a mas­sive trans­for­ma­tion. It will need a lot of in­vest­ment, re­or­gan­i­sa­tion of labour. It does not mean job losses, but re­train­ing the staff. It is an up­heaval that will re­quire mas­sive ef­fort, and will be painful in the be­gin­ning but will lead to longterm sus­tain­able model in the fu­ture,” said Gupta, who founded Lib­erty in his dorm room in Cam­bridge Univer­sity in 1992.

Gupta, known as SKG in the in­dus­try, pointed out that UK steel plants im­port 100% of their raw ma­te­rial even when UK re­mains one of the largest ex­porters of scrap steel in the world. Tata Steel has two loss-mak­ing steel plants in the UK that em­ploy about 15,000 peo­ple.

COST FAC­TOR

Gupta’s Lib­erty House has traded var­i­ous com­modi­ties in the mar­kets of Asia, Mid­dle East, Europe and Africa. From 2000 on­wards, his fo­cus has been on grow­ing the trade in steel, met­als and raw ma­te­ri­als while de­vel­op­ing the in­dus­trial as­set base of the group. Con­tin­u­ous in­vest­ments in man­u­fac­tur­ing as­sets is to com­ple­ment the growth in its trad­ing busi­ness. It op­er­ates from Lon­don, Dubai, Sin­ga­pore and Hong Kong with a net­work of of­fices spread across 30 coun­tries around the world. Its an­nual turnover is ap­proach­ing $5 bil­lion with to­tal steel pro­duc­tion ca­pac­ity of more than 3 mil- lion tonne per an­num.

Gupta said Lib­erty House, Tata Steel and the UK gov­ern­ment have the re­sources to turn­around the ail­ing busi­ness. “This needs very big in­vest­ment, more than what the UK has had for a gen­er­a­tion. We need to work this out with Tata and the gov­ern­ment on how we are go­ing to or­ga­nize it,” he ex­plained.

He said there are mas­sive pen­sion, en­vi­ron­men­tal and staff li­a­bil­i­ties to be tack­led as art of the whole gam­bit. He is also in talks with the gov­ern­ment to solve the prob­lem of high en­ergy bills in the UK.

Gupta, how­ever, isn’t too wor­ried about re­sis­tance from unions against his plan to shut down the steel­mak­ing blast fur­naces, and said he would rather wait un­til all the stake­hold­ers buyin to his idea of re­cy­cling scrap steel.

“I have had pos­i­tive in­ter­ac­tions with unions till date. They have been very sup­port­ive, partly be­cause things have be­come so dif­fi­cult. I am not ex­pect­ing any re­sis­tance and prob­lem. On the con­trary, I am ex­pect­ing them to be on my side,” Gupta said.

Lib­erty House bought ail­ing steel com­pany Ca­paro from Swaraj Paul last year, and two La­nark­shire steel mills from Tata Steel last month in a deal bro­kered by the Scot­tish gov­ern­ment. The trad­ing com­pany also restarted a steel plant in New­port, giv­ing some hope in an in­dus­try see­ing a spate of job losses. Gupta was born in Lud­hi­ana in 1971. He moved to the UK to study in his early teens. His fa­ther PK Gupta, who was then a bi­cy­cle man­u­fac­turer and ex­porter, moved to Nige­ria to es­tab­lish a busi­ness em­pire named African In­dus­tries.

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